October 26, 2017 / 6:12 AM / a year ago

EM ASIA FX-Asian currencies higher on dollar weakness ahead of ECB meeting

 (Adds text, updates prices)
    By Sandhya Sampath
    Oct 26 (Reuters) - Asian currencies firmed against the
dollar on Thursday, tracking gains in the euro ahead of the
European Central Bank's decision at which it is expected to
shift away from its accommodative monetary policy.
    With the euro zone's economic recovery now into its fifth
year, the ECB is widely expected to cut back on bond-buying
stimulus, gearing up to raise interest rates, along with other
major central banks of developed economies.

    "The ECB's quantitative easing recalibration today could
provide a boost to the euro-dollar and in turn enable the
dollar-Asia to correct significantly lower," said Sim Moh Siong,
FX strategist at Bank of Singapore.
    Since inflation remains low, however, any reduction in the
monthly amount of asset purchases is expected to come with a
lengthy extension of the programme.
    The euro inched up as much as 0.2 percent to $1.183,
while dollar index against a basket of six currencies was down
0.15 percent at 93.565, its lowest in six days.
    The greenback, which lost steam having rallied over the past
week on optimism over the prospects for U.S. tax reforms and
speculation over next Federal Reserve chair, was weighed by a
slight pull-back in U.S. Treasury yields.
    After rising significantly in the early U.S. session,
treasury yields have come off quite a fair bit, which took off
some pressure from dollar against Asian currencies as a whole,
added Siong.
    In Asian currencies, the South Korean won was the
best performer, strengthening as much as 0.35 percent to its
strongest level since Sept. 1.
    The won took support from South Korean third quarter gross
domestic product, which grew at its fastest pace in seven years
on global demand for the country's electronics, reinforcing the
case for higher interest rates.
    The Taiwan dollar was up 0.17 percent, while the
Japanese yen firmed 0.2 percent against the dollar.
    The Singapore dollar gained slightly as data showed
the city-state's industrial production in September beat
expectations and grew for the fourteenth consecutive month
thanks to continued growth in electronics.
    China's yuan was 0.16 percent higher on the day,
in line with a strengthening official midpoint.
    The Thai baht did not trade as markets were closed
for a public holiday.
    The Indian rupee strengthened for a second straight
session, up as much as 0.25 percent, in line with the broader
improvement in risk appetite.
    The Indian government said on Tuesday it approved a $32.43
billion plan to recapitalise its state banks over the next two
    With the plan, Prime Minister Narendra Modi is bidding to
tackle a major drag on the economy that has frustrated his
attempts to boost growth.
    "The markets are expecting that to be helpful in terms of
bolstering, lending, given that Indian state banks have been
constrained by capital adequacy in the past," said Siong.
    The following table shows rates for Asian currencies against
the dollar at 0528 GMT.
  Change on the day at                                     
        0528 GMT                                   
  Currency               Latest bid  Previous day  Pct Move
  Japan yen              113.37            113.73     +0.32
  Sing dlr               1.3594            1.3602     +0.06
  Taiwan dlr             30.221            30.266     +0.15
  Korean won             1124              1127.9     +0.32
  Peso                   51.750             51.77     +0.04
  Rupiah                 13568              13575     +0.05
  Rupee                  64.76              64.89     +0.20
  Ringgit                4.233              4.234     +0.04
  Yuan                   6.630             6.6400     +0.16
  Change so far in 2017                                    
  Currency               Latest bid  End 2016      Pct Move
  Japan yen              113.37            117.07     +3.26
  Sing dlr               1.3594            1.4490     +6.59
  Taiwan dlr             30.221            32.279     +6.81
  Korean won             1124             1207.70     +7.42
  Peso                   51.750             49.72     -3.92
  Rupiah                 13568              13470     -0.72
  Rupee                  64.763             67.92     +4.88
  Ringgit                4.233             4.4845     +5.95
  Yuan                   6.630             6.9467     +4.78

 (Reporting by Sandhya Sampath in Bengaluru; Editing by Sam
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